Alibaba’s Jack Ma and the company’s co-founder Joseph Tsai are following the path taken by Bill Gates and Warren Buffett in creating a philanthropic trust.

An article entitled China’s Carnegie in The Economist, [May 3rd, 2014. P12] outlined this further example of creative capitalism.

The article traces the philanthropic ‘conversion’ of business pioneers and wealth generators from the days of Andrew Carnegie to today’s Jack Ma who has recently [April 2014] announced the formation of a $3 billion trust.

A cynical view of giving

The Economist is suspicious of altruism if a self-interested explanation comes to hand. It tests the ethical orientation of Ma’s actions and implicitly those of Bill Gates by suggesting that a cynical view that might be ‘straight out of a Silicon Valley public relations play-book ahead of Alibaba’s expected public offering this year which could value the company at $150 billion.’ Regardless of such imputed motivation, the initiative could add impetus to China’s efforts at environmental sustainability.

The Gates Foundation

Bill Gates and Warren Buffet have been leaders in a movement for the wealthiest capitalists to pledge sizable proportions of their assets for charitable purposes. The Gates foundation is admirably led by Biil and Melinda Gates.

From Silicon Valley to Shanghai

The movement has spread into other parts of the world including India. Jack Ma is overcoming reluctance of the wealthiest Chinese entrepreneurs to reveal their wealth as the country develops its new mixed socialist/capitalist political economy.

When Asian business students are asked to write about leadership, one of their favourite topics is the Chinese telecommunications giant Alibaba, and its dynamic leader Jack Ma

This is hardly surprising. The company has grown through the vision and enterprise of its founder. Already a host of corporate stories are developing around him and his giant baby, recently valued at 35 billion dollars.

The Jack Ma story

Jack Ma fits the profile of the creative entrepreneur. His decisions are imaginative. He describes his leadership journey in vivid anecdotes which suggests that he has a well-developed transformational style. An English teacher and graduate of Hangzhou, Mr Ma became a skilled web site builder, one of the first in China.

When he was thinking about going international he looked for a corporate name that worked in Chinese but which also had global connotations. Once when in America, someone mentioned the story of Ali-Baba to him, and he thought he had found what he was looking for. He tested his idea quickly and locally, as found there was surprising recognition of the story from the Arabian Knights, and the magic password Open Sesame which opened up a cave full of treasures.. Yes, my company could be remembered for opening up a place full of treasures, he thought. Ali-Baba had brought prosperity to his village.

He listed the new name slightly differently, noticing that it was also effective when written in Chinese characters.

A sprawling conglomerate

Alibaba, founded in 1999, was to grow into the largest private corporation in China. It was described by Bloomberg Business Week as a sprawling conglomerate of web-based companies. The largest elements are Taobao and the Alibaba group. The former is a Chinese version of E-Bay and was to become market leader in e-commerce in China

Its Business relationship with Yahoo has been controversial. Alibaba grew and prospered under its founder-leader, Yahoo struggled to compete in its more global business.

Time to quit says Jack Ma

Recently, the founder has decided to hand over the leadership to a senior executive Jonathan Lu in advance of an anticipated initial public share offering which is being predicted to match that of Facebook [or more, as Facebook’s shares have dipped this year]. The South China Post stated:

The announcement came a few days after Alibaba, which Ma founded in 1999, announced a sweeping restructuring that will divide the group into 25 business units under the direction of two committees, one for strategy and the other for operations. In an e-mail sent to Alibaba’s more than 24,000 employees worldwide on January 15, Ma said he decided to relinquish his position as chief executive because the company had people who “are better equipped to manage and lead an internet ecosystem like ours”.

Ma described how he realised years ago that he was not suited to be a traditional chief executive of a big firm. He said that “at 48 I am no longer ‘young’ for the internet business”. What he aims to be is “a good partner to more capable colleagues”, which he intends to accomplish by continuing his role as executive chairman.

Ma described the restructuring as “the most difficult reorganisation” in Alibaba’s history. But it is a bet to stay competitive in the mainland’s fast-growing e-commerce market. JP Morgan has estimated this market to be worth US$436 billion in 2015. The move fuelled speculation that Ma was laying the groundwork for Alibaba’s initial public offering, which the company has denied.

What happens next?

Predictions are generally favourable. I agree with The Economist [March 23rd 2013] which noted that while the future is promising “…there is nothing inevitable about Alibaba’s future fortunes”. I urge students of leadership to do a little ‘map testing’ before accepting that newspaper’s casual SWOT analysis: [1] that Alibaba could overreach itself; that [2] it would face the risk that ‘foreign governments will clamp down’ and [3] face an internal threat because ” The Communist Party is bound to be jealous of an outfit that has so much data on Chinese citizens.”

I’m afraid that piece of analysis would have not obtained a particular high grade, if it had been supplied in a student assignment on Alibaba’s prospects.